Opinion: There’s a simple solution to child poverty: Expand the child tax credit

As Congress debates major tax reforms, a proven anti-poverty tool hangs in the balance: the child tax credit.

This credit reduces a family’s tax bill by up to $2,000 per child, but its current structure leaves out millions of our poorest children while providing full benefits to families earning six figures. Here in the Bay Area, where a family of four needs $136,872 to make ends meet, one in three households struggle to meet basic needs.

Expanding the child tax credit (CTC) is critical to reducing child poverty. It’s been proven to work. You see, in 2021, Congress temporarily expanded the CTC to $3,600 per child under age 6 and $3,000 for older children, and crucially, made it fully refundable — meaning even families with little or no income received the full amount as monthly payments. This simple change transformed the credit from a tax break benefiting middle and upper-income families into America’s most effective anti-poverty program.

Though critics warned that people would spend the extra income frivolously, here’s what happened: parents of young children spent the checks on basic family needs like food, clothing, and rent. For many children, it was the first time they experienced a pantry filled with food, shoes that fit, or maybe even a new blanket. Not only were parents able to meet their children’s immediate, basic needs, these purchases stimulated local economies.

The results were immediate and dramatic.

Child poverty plummeted by 46% nationally, lifting 3.7 million children above the poverty line. Food insecurity dropped by 26%. According to the National Institutes of Health, cash stipends disbursed during the first year of a child’s life are associated with greater cognitive development. When the expanded CTC expired in December 2021, these gains reversed almost overnight. Child poverty doubled in California, pushing nearly 2 million kids back into financial insecurity.

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Child poverty is a policy choice and the child tax credit is a proven solution to this shameful scourge. As Congress prepares to reform the U.S. tax code, our elected leaders in Washington must make the expanded child tax credit permanent and inclusive, ensuring all children benefit — including those whose parents work and pay taxes without legal residency or kids whose parents earn too little to qualify.

Currently, the CTC excludes our most vulnerable children.

Families must earn at least $2,500 to receive any benefit, and they only get the full credit after earning $30,000. This design perversely delivers the least help to children who need it most, while providing full benefits to families making up to $400,000.

Most Americans (seven in ten) want Congress to expand and make the child tax credit permanent. The CTC enjoys bipartisan appeal, with support from key figures including House Ways and Means Committee Chairman Jason Smith, Senate Finance Committee Chairman Mike Crapo and Ranking Member Ron Wyden. It would cost approximately $100 billion annually — about 1.5% of the federal budget — to increase the CTC.

The solution to child poverty isn’t complex — sometimes it’s as straightforward as ensuring families have enough money to meet basic needs. Nearly 1.5 million children call the Bay Area home; let’s ensure they all have food in their bellies and a warm bed at night.

Keisha Browder is CEO of United Way Bay Area.